Wondering what most people are trading during coronavirus lockdown? Recently I found out that eToro released their internal data on client trades and trends during this coronavirus pandemic. I personally found this very interesting so I wanted to share with everyone and hopefully this will give you traders out there more insight into what eToro’s millions of users are trading.
First off, I’m very happy that eToro has decided to release this information. Institutions in the financial services industry like insurance, banks, and other brokers are often very secretive with their data, so I’m glad eToro sees it differently.
Increased Trading Activity on eToro
Same as here in the Philippines, most countries are on lockdown as we speak. With people stuck at home, it’s easy to see traders being able to focus more on their trades. Compound this with the stock market tumble, this has generated increased interest in global markets for many people worldwide.
It seems like for eToro, this meant a 5x increase in new trade positions since the virus started.
What Most People Trade During the Coronavirus Lockdown
As you can see in the photo, indices were the most popular instruments that people on eToro traded. While eToro didn’t release exact numbers, they did say that indices accounted for about 33% of all trades, something never seen before in their history. Stocks, as expected, were close, with 30%, while commodities came in at 16%.
It is interesting to me that crypto, once the leading category in eToro, fell to just 7%. Perhaps signifying that BTC hasn’t reached safe-haven status like Gold yet. Or perhaps it was just overshadowed by recent stock market and oil news.
Long Vs Short Positions
As expected, the percentage of short trades increased by quite a bit because of the virus. People took advantage of the fact that the market was falling. Remember, short or sell positions increase in value as the price of the asset goes down. Essentially the opposite of buying or going long.
Interestingly though, there was an increase in long trades towards the last week of March, coinciding with the release of the US’ $2 trillion stimulus package. Assuming eToro is an accurate representation of the market, it seems people still do trust the markets.
Of course, when using this logic, we have to keep in mind that there will almost always be more long trades than shorts, because the risk in shorts are higher and there are also traders with a long-only strategy.
What Does this Mean for You as an Investor?
1. More and more people are entering the markets
This can be a good thing or a bad thing. What is certain though, is that these new traders can certainly push prices significantly higher or lower. Expect bigger price swings in the next few months until the coronavirus is totally contained.
2. Less action in some markets
Because people are flocking to indices and stocks as seen on eToro, that might mean less activity in other markets like crypto, or forex. While there will always be people trading on these assets, that just means movements might be smaller there.
3. Market sentiment
I found the buy vs short graphic the most intriguing because it shows us real data on what traders actually think of the markets. We might be overly pessimistic or optimistic about the markets ourselves, but what moves prices are the sentiment of the whole market.
Stay tuned to the next article here, as I will be diving deeper into what specific sectors in the financial markets are being significantly impacted by the coronavirus.
If you are interested in trading global stocks, world top indices commodities, and currencies, you may create a free trading account on eToro and learn how the financial markets can create income by trading. Create a FREE $100K Virtual account HERE